Last Updated: 26/10/2011
CENTRAL AUTHORITY FOR REPORTING
The Nigerian Financial Intelligence Unit (NFIU) was established The NFIU was established by Sections 1(2) and 12(2) of the Economic and Financial Crimes Commission (Establishment) Act 2004 and is instituted under the Economic and Financial Crimes Commission to receive, analyse and disseminate financial intelligence to law enforcement agencies and other relevant institutions.
OTHER ANTI-MONEY LAUNDERING REGULATOR(S)
Other anti-money laundering regulators relevant to lawyers are among others:
Federal Ministry of Finance,
Nigerian Ministry of Justice,
Economic and Financial Crimes Commission (EFCC) – responsible for collecting and analyzing data from Standard Transactions Reports (STRs) sent by entities obliged under the AML law,
Nigerian Police Force,
Central Bank of Nigeria (CBN),
National Drug Law Enforcement Agency (NDLEA) – has powers similar to those of the EFCC, but limited onlyto cases relating to laundering of proceeds of illicit traffic in narcotic drugs and psychotropic substances,
Securities and Exchange Commission (SEC),
National Insurance Commission (NIC),
Special Control Unit against Money Laundering (SCUML) - established as a specialized unit of the Federal Ministry of Commerce and Industry by the Federal Executive Council of Nigeria,
Nigerian Bar Association – established as the Supervisory Regulatory Authority (SRO) for lawyers in Nigeria,
Association of Capital Market Solicitors– responsible for verifying and authenticating documents associated with the sale and purchase of shares in the capital market; relevant for lawyers registered with SEC only.
ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?
Yes. Lawyers are covered by Section 25 of the Money Laundering (Prohibition) Act 2011, which identifies law practitioners as “Designated Non-Financial Institution (DNFI)”.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
Although these laws make no express reference to lawyers, they may apply to lawyers to the same extent as to the other professionals.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
Visiting lawyers will not be subject to the local AML laws, unless enrolled and called to the Nigerian Bar or otherwise permitted by the Chief Justice of Nigeria to practice in Nigeria.
Yet still, visiting lawyers may be subject to the local laws in any other capacity, as applicable.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
There are currently no AML guidelines in place for legal practitioners. However, there is a current discussion within the Nigerian Bar Association and the National DNFI Advisory Council, in which the NBA is represented regarding the creation of AML guidelines for all DNFIs.
Section 5(4) of the Money Laundering (Prohibition) Act 2011 empowers the Minster of Commerce to issue guidelines regulating the operations of DNFIs.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
Presently, the Nigerian Bar Association is not involved in the supervision or enforcement of AML regulations. Discussions in this regard are ongoing in the National DNFI Advisory Council.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
Duty to identify clients
Section 3 of the Money Laundering (Prohibition) Act 2011 provides that DNFIs have a duty to identify customers before entering into a business relationship and update all relevant information during the course of such relationship
Section 3(6) of the Money Laundering (Prohibition) Act 2011 provides further that if it appears to a DNFI that a customer may not be acting on his own account, the DNFI must use all reasonable means to ascertain person(s) truly in control.
Section 3(7) of the Money Laundering (Prohibition) Act 2011 provides that if a DNFI suspects or has any reason to suspect that the amount involved in a transaction poses proceeds of a crime or any illegal act, it shall require be required to report the customer no matter what is the value of a transaction in question.
Section 5 of the Money Laundering (Prohibition) Act 2011 provides that where a transaction exceeds the value of US$1,000 or its equivalent, the DNFI must ensure that the customer fills out a standard data form and confirms his/her identity by presenting his/her international passport, driving licence, national identity card or other document containing his/her photo and personal details, as may be prescribed by the Ministry of Commerce.
DFNIs that fail to comply with the requirement of the MLA with regard to identification and submission of returns on transaction commit an offence and can be liable to a fine upon conviction.
Duty to scrutinize
Section 3(1)(b) of the Money Laundering (Prohibition) Act 2011 provides that DNFIs are obliged to scrutinize all ongoing transactions to ensure that the customer’s transaction is consistent with the business and risk profile.
Duty to record
By virtue of Section 5 of the Money Laundering (Prohibition) Act 2011, DNFIs whose business involves cash transactions must submit to the Minister a declaration of their activities.
The section also provides that a DNFI must record all cash transactions in a chronological order indicating each customer’s surname, fore names, and address in a register numbered and forwarded to the Ministry of Commerce.
Sections 5 & 7 of the Money Laundering (Prohibition) Act 2011 provide that records must be preserved for at least five (5) years.
Duty to investigate and report
Section 10 of the Money Laundering (Prohibition) Act 2011 provides that DNFIs must report to the EFCC any lodgement or transfer of N5,000,000.00 (Five Million Naira) or above by an individual or N10,000,000.00 or above in the case of a body corporate within 30 days.
They are also obligated to investigate and report suspicious transactions.
Duty to create awareness amongst employees
DNFIs have a duty to develop programmes for their employees that would help create awareness and combat the laundering of proceeds of crimes or other illegal acts.
The Central Bank of Nigeria may impose sanctions on DNFIs that fail to develop such programmes.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
The AML is quite specific as to the due diligence measures to be carried out by lawyers. However, there are certain instances where it is left to the discretion of legal practitioners such as in Section 6(1) of the Money Laundering (Prohibition) Act 2011 cited below.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Section 3(8) of the MLA provides that where the client is a public officer the DNFI must put in place appropriate risk management systems and obtain management approval before establishing a business relationship and during business relations with public officers.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
There is no specific provision that permits such reliance, but it would appear that, in the absence of any prohibition, such reliance may conceivably be permissible.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
Section 6 (1) provides that where, in the opinion of a DNFI, a transactions is
unjustifiable and unreasonable,
appears to have no economic or lawful justification
is surrounded by unusual or unjustifiable complexities
involves terrorist financing, or
is inconsistent with known transaction pattern
Such a transaction should be deemed suspicious and should be investigated with the aim of ascertaining the origin and destination of such funds and the identity of the beneficiary.
Section 6 (2) provides that a DNFI must, within 7 days of a transaction referred to in Section 6 (1), prepare a report containing all relevant information, which is to be sent to the EFCC. The DNFI must also take appropriate steps to prevent the laundering of proceeds of a crime or an illegal act.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
The Money Laundering (Prohibition) Act 2011 does not provide for attorney/client privilege, but since the law recognises the privilege that attaches to attorney/client relationships, the argument remains open.
However, Section 13(4) of the Money Laundering (Prohibition) Act 2011 provides that neither banking secrecy nor the preservation of customer confidentiality may be invoked as a ground for refusing to disclose facts likely to constitute an offence under the Money Laundering (Prohibition) Act 2011, the EFCC Act or any other law.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
Section 6(10) of the Money Laundering (Prohibition) Act 2011 provides that directors, officers and employees who carry out their duties under this act in good faith, shall not be liable to any civil or criminal liability or have any criminal or civil liability brought against them by their customers.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
Yes, legal advice or assistance may be provided unless the EFCC directs that the transaction be deferred. Such deferral may only be, in the first instance, for a maximum of 72 hours (section 6(6) of the Money Laundering (Prohibition) Act 2011).
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Yes. Section 16 (I)(a) of the Money Laundering (Prohibition) Act 2011 provides that it is an offence for “any person … being a director or other employee of a financial institution” to warn or “in any other way” intimate with the owner of funds reported to EFCC by way of STR.
The offence is punishable by a jail term not less than 2 years or more than 3 years, or a fine of between N500,000 and N1,000,000.
The provision does not include DNFI in the prohibition.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
There are no restrictions on accepting a new client other than these included in Section 3 of the Money Laundering (Prohibition) Act 2011, stating that a DNFI must verify its customer’s identity before entering into a business relationship with a customer.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
DNFIs must identify, verify and update all relevant information concerning a customer during the course of the business relationship. It must also scrutinize all its ongoing transactions and report any suspicious transaction to the EFCC.
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
The Money Laundering (Prohibition) Act 2011 is the only AML legislation that directly affects lawyers in Nigeria with regard to the AML regulations.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
There have been a handful of complaints, and arrests, but it seems, there has not been any convictions, or even trials.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) OR A FATF-STYLE REGIONAL BODY CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
Yes. Nigeria has been evaluated by GIABA (Groupe Intergovernmental d’Action contre le Blanchiment d’Argent en Afrique de l’Ouest – Intergovernmental Action Group against Money Laundering in West Africa),which rated the compliance by lawyers as very low.
See the document here.
Information provided by:
Babajide O. Ogundipe and L. Adefolake Sadiq of Sofunde, Osakwe, Ogundipe & Belgore
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